Kasai Kogyo Co., Ltd. Business Report FY2009

Business Highlights

Financial Overview

-Sales decreased year-on-year due to reduced production volumes at the Company's customers in Japan, North America, and Europe.

Operating income

3,245

1,936

67.6

-

Ordinary income

3,152

806

290.8

-

Net income

1,277

(3,543)

-

-

Supply Agreements

Supplying components for the Nissan March, the automaker's strategic compact vehicle being sold worldwide. -Kasai Teck See Co,. Ltd. started supplying its products to Nissan Motor Thailand in February 2010.-Hanyang Automotive India (the Company's technical partner in India) started supplying its products to Renault-Nissan Automotive India in May 2010.

Integrating production of sunvisors for the global market at Kasai Teck See Co,. Ltd. -In addition to producing sunvisors for the Juke produced by Nissan; and the Insight, the CR-Z, and the Life by Honda, the facility will also manufacture those for the Nissan Leaf and the Honda Civic.

Volkswagen project in the U.S.A. -Type of vehicle model: new, medium-size sedan with a 2.5-liter or 3.6-liter engine-Start of production: January 2011-VW's facility: Volkswagen's new plant in Chattanooga, Tennessee, U.S.A.-Planned production volume: 150,000 vehicles per year-Products Kasai is going to supply to Volkswagen: doors for front-engine, rear-wheel-drive vehicles; and doors for rear-engine, rear-wheel-drive vehicles; pillars for front-engine, rear-wheel-drive vehicles; and headliners-Production facility: Tennessee Plant of M-TEK Inc. -Expected revenue: 38 million dollars per year

New Company

-The Company announced that it will spin off its Kyushu Division, which is producing and selling automotive interior products in Usa City, Oita Pref., establishing in its place a new subsidiary. The aim of the establishment is to provide more customer-oriented services in the Kyushu region. The new company, Kyushu Kasai, will be established on Jan. 1, 2010 with a registered capital of 90 million yen. It will hire 175 employees, planning to generate 8 billion yen in sales per year. (From an article in the Nikkan Jidosha Shimbun on Oct. 15, 2009)

Percentage of Sales by Major Customer

R&D

R&D Expenditure

(in millions of JPY)

FY2009

FY2008

FY2007

Overall

567

655

521

-R&D activities are implemented mainly by Development Division

R&D Activities

1. Reducing weight of products-Reducing product weight is a high-priority issue for the Company's entire product line including doors, pillars, headliners, and trunk trim. -The Company developed molded plastic parts that have excellent surface quality without any coating. These include plastic foamed products, thin-wall molded products, and urthane-based, ultra lightweight headliners.

2. Safety-The Company successfully created injection molded parts that are capable of absorbing energy, thus contributing to safety inside vehicles. These parts, which are characterized by their unique design structure, are being used in mass-produced vehicles. The accuracy of the Company's technology to analyze lateral collisions has reached the stage to where it can be put to practical use. This technology, which uses CAE (computer simulation), was supported by validations conducted on bench tests.

3. Global environmental protection-The Company is replacing glue and cleaning agents that contain VOC (Volatile Organic Compounds). The Company instead will use standard and water-based adhesives, in addition to materials, that are free of VOCs. As to the use of vinyl chloride materials, the Company is switching over to olefin-based thermoplastic elastomer (TPO) and urethane based thermoplastic elastomer (TPU).

4. Comfortable interior space-For the purpose of further improving the sound insulating properties of its interior components, the Company introduced CAE systems into its development operations. This adds flexibility to its designing activities, allows choosing materials from among multiple products, and enhances the level of precision and quality of its products. It will also develop and propose advanced technology for luggage compartments and other functional products after conducting various benchmarking activities.

5. Quality-The Company is developing door trims such as door surfaces and door waist ornaments; as well as door interior products.-The Company is also developing luggage compartment systems for SUVs and minivans.

Investment Activities

Capital Expenditure

(in millions of JPY)

FY2009

FY2008

FY2007

Overall

4,266

6,708

8,640

Investments in Japan

-In Japan, the Company invested 3,468 million yen mainly in installing new production equipment and dies in order to deal with vehicle model changes.

Investments Outside Japan

-Outside Japan, the Company spent 351 million yen to install new equipment at M-TEK Inc.

<China>-As a measure to better support its customers which are expanding their production volumes in China, the Company is working on increasing molding capacity in the Guangzhou area, while looking for a location to build a new plant in the Zhengzhou area.

New Facilities

(As of Mar. 31, 2010)

Company nameSite name

Type of facility

Planned investment(million JPY)

Start

Planned completion

Head Office(Kanagawa Pref., Japan)

Quality measurement instruments, inspection tools

1,596

2010.04

2011.03

Samukawa Division(Kanagawa Pref., Japan)

Facilities to assemble automotive interior parts, tools, and other items

255

2010.04

2011.03

Mie Kasai Co., Ltd.Head Plant(Mie Pref., Japan)

Facilities to assemble automotive interior parts, tools, and other items

11

2010.04

2011.03

Mie Kasai Co., Ltd.Shiga Plant(Shiga Pref., Japan)

Facilities to assemble automotive interior parts, tools, and other items

32

2010.04

2011.03

Gunma Kasai Co.,Ltd. Tatebayashi Plant(Gunma Pref.,Japan)

Facilities to assemble automotive interior parts, tools, and other items

37

2010.04

2011.03

Gunma Kasai Co.,Ltd. Ota Plant(Gunma Pref.,Japan)

Facilities to assemble automotive interior parts, tools, and other items

41

2010.04

2011.03

Kyushu Kasai Co., Ltd.(Oita Pref., Japan)

Facilities to assemble automotive interior parts, tools, and other items

169

2010.04

2011.03

M-TEK Inc.(Tennessee, USA)

Facilities to assemble automotive interior parts, tools, and other items

4,853

2010.04

2011.03

R-TEK Ltd.(Tyne and Wear, UK)

Facilities to assemble automotive interior parts, tools, and other items

618

2010.04

2011.03

Kasai Mexicana S.A. de C. V.(Guanajuato, Mexico)

Facilities to assemble automotive interior parts, tools, and other items